RM2,050-RM2,300 A TONNE LIKELY
Optimism on back of larger export volumes to India, China and EU
ANALYSTS expect crude palm oil to continue trading at between RM2,050 and RM2,300 per tonne, given the recent runup in the commodity’s prices and thanks to larger volume of exports to India, China and the European Union (EU).
Affin Hwang Capital said the average Malaysian Palm Oil Board locally-delivered price last month was relatively flat at RM2,104 per tonne while the 10month price averaged RM2,008.50 per tonne.
Malaysia’s 10-month export volume for this year was 14 per cent higher at 15.67 million tonnes from 13.73 million tonnes in the same period a year ago.
The firm said Malaysia’s biodiesel exports had increased 23.8 per cent to 490,000 tonnes in the first 10 months.
Affin Hwang has maintained an overall “neutral” rating on the local plantation sector but had a “sell” rating on Jaya Tiasa Holdings Bhd.
The firm has a “buy” call on Ta Ann Holdings Bhd, IJM Plantations Bhd and Hap Seng Plantations Bhd, and a “hold” call on FGV Bhd, IOI Corp Bhd, Sime Darby Plantation Bhd, Genting Plantations Bhd, Kuala Lumpur Kepong Bhd and WTK Holdings Bhd.
Meanwhile, MIDF Research acknowledged that palm oil exports last month had increased slightly by four per cent to 1.64 million tonnes, mainly attributable to the steady demand growth from India, China and the EU.
“The increase in imports by China was primarily due to the low vegetable oil stocks in its country amid a trade war with the United States and the outbreak of African swine fever virus,” said the firm.
Lower supply of soyabean and weaker soya-based feed meal demand may have tilted the favour to palm oil as an alternative as both are close substitutes.
“We expect strengthening demand from China for restocking activities for the major Chinese New Year festival in January next year,” it added.
MIDF Research said since September this year, India’s five per cent tariff hike had resulted in removal of Malaysian palm oil preferential treatment across Asean.
In view of this, the research house has maintained its “negative” view on the sector with an unchanged palm oil price target of RM2,090 per tonne for this year.